Tax Journal

Transfer pricing briefing for September 2014

19 September 2014

Poland’s thin cap rules are becoming less generous: the limitation on deductible interest looks likely to be based on a much lower gearing ratio; and the definition of a connected loan becomes stricter. India’s preoccupation with marketing intangibles looks set to continue: the extent to which marketing costs incurred locally, for promoting the business in India, constitute an international service, rather than purely supporting the local business, is in contention once again.

Martin Zetter (Macfarlanes) provides an overview of recent developments, with updates from Poland and India.

At the time of going to press, the OECD had just published the first base erosion and profit shifting (BEPS) deliverables. A full reading may reveal some darker materials lurking, but a first glance suggests a disappointing lack of specifics. Most of the content is yet to be finalised; for example, much of the intangibles document is highlighted to show it is ‘interim guidance’, not yet fully agreed. While it is understandable to seek consistency across all the BEPS actions, leaving so much to be finalised next year gives taxpayers little time to implement new arrangements and creates uncertainty.

Meanwhile, local country developments continue and I am looking at two examples this month, before coming back to a detailed review of the OECD papers later.


Poland is amending its transfer pricing documentation requirements, along with its thin capitalisation rules. Partnerships and joint ventures will now be subject to the transfer pricing documentation regulations. Additional permanent establishments (PEs) may face tax ...

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